Can I Change My Insurance Coverage Due to COVID-19?

Sep 9, 2020

By Chris Ingelsby, Manager, Altus Corporate Risk

The impact of COVID-19 has left all of us feeling the economic repercussions. As offices and storefronts slowly reopen, many businesses are still navigating the financial impact of the pandemic. Since there is little chance that businesses are going to recover COVID-related losses from their property insurance policies, many are looking for other ways to lower expenses.

Depending on your situation, there still may be opportunities to lower your insurance costs and manage your cash flow.

Can I amend my insurance policy?

Some insurance policies are priced on a singular exposure base, such as payroll, sales or square footage. If your payroll or sales figures are lower now, your insurance carrier may be willing to adjust your premium during the policy term to reflect the lower exposure basis. For example, if your general liability coverage was calculated based on sales but you now have lower revenue because of the pandemic, you might now be paying too much for your insurance coverage.

Policies calculated from payroll projections or office square footage work the same way. If your anticipated payroll for the year is much lower than you originally thought at the beginning of the year or you reduced the size of your office (or plan to do so in future months), you might be able to amend your policies and lower your premium costs. It’s important to note that all workers’ compensation insurance policies are audited at the end of the policy year, so you should receive a return premium if your payroll is below the original projections provided at the beginning of the policy term.

Even if your staff is working remotely, leaving your office unoccupied, the majority of leases require property and general liability insurance. Thus, you are likely contractually obligated to have insurance coverage. Though your team is working from home or at a limited capacity, you’re still exposed to risk. Reducing or changing your coverage might lower your premium costs, but it might expose you to a potentially catastrophic financial loss.

If you’re not sure how your policies are calculated but you’ve reduced staff or office space or lost projected sales because of the pandemic, your broker can help determine policies that can be changed and help you lower your premium costs.

Changing your payment terms

Insurance carriers understand the financial stress businesses are under at this time and they want to work with clients to ensure they have the coverage they need without adding additional pressure. They’ve been easy to work with to establish new payment terms, including offering extensions or monthly payment plans.

With the promise of returning to “normal” seeming further and further away, knowing your options can help provide relief without cutting coverage. Your broker can negotiate with the carrier on your behalf to find the payment option that works for you.